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Why furor over IRS tea-party scandal won't subside, despite ouster

The removal of the acting IRS chief and Thursday's appointment of a new one will do little to quiet the storm over the tax agency's targeting of politically conservative nonprofit groups. What steps might?

Pablo Martinez Monsivais/AP

President Obama speaks on the Internal Revenue Service's targeting of conservative groups for extra tax scrutiny in the East Room of the White House in Washington, Wednesday. Obama announced the resignation of Acting IRS Commissioner Steven Miller, the top official at the IRS.

The heads are starting to roll at the Internal Revenue Service, but it will take a lot more than a single high-profile resignation to quiet the storm raging over the IRS targeting scandal.

In a delayed act of damage control, President Obama announced Wednesday evening the forced resignation of Acting IRS Commissioner Steven Miller. It was, of course, only a matter of time, an expected move to assign blame and accountability, as well as provide catharsis for an angry public.

The president wasted no time naming a temporary replacement, on Thursday selecting Daniel Werfel, controller of the White House Office of Management and Budget (OMB), to take on the unenviable task of rebuilding the tarnished agency's reputation.

“Americans are right to be angry about it, and I’m angry about it,” Mr. Obama said Wednesday when revealing Mr. Miller's departure, adding that he “will not tolerate this kind of behavior in any agency, but especially in the IRS, given the power that it has and the reach that it has.”

The Obama administration also released a letter from Treasury Secretary Jack Lew that demanded that Mr. Miller resign in order “to restore public trust and confidence in the IRS.” (The IRS is part of the Treasury Department.)

The resignation came six days after news emerged of the Internal Revenue Service's targeting actions and a day after a watchdog report concluded the agency used “inappropriate criteria” to screen groups seeking tax-exempt status. The IRS used keywords and phrases such as “tea party” and “patriot” to target conservative groups for extra scrutiny.

In fact, the targeting occurred not under Miller, but during the tenure of former IRS Commissioner Doug Shulman. Still, lawmakers say Miller did not inform Congress about the targeting practice, despite inquiries from Republican lawmakers.

“My question isn’t about who is going to resign. My question is who’s going to jail over this scandal?” he said Wednesday.

The answer will have to wait for the outcome of a Justice Department criminal investigation, which Attorney General Eric Holder announced earlier this week.

To say that Mr. Werfel, who takes over as acting IRS commissioner next Wednesday, is tackling one of the least-envied jobs in Washington would be a gross understatement. He faces gargantuan challenges.

Among them, he will have to address the faulty protocol that led to the inappropriate targeting in the first place. And because the scandal exposed problems in the tax code’s designation of politically oriented nonprofits, Werfel may need to call for an overhaul of the auditing process for 501(c)(3)s and related groups.

Perhaps most important, however, as Politico has pointed out, the successor at IRS will have “a massive public relations job to carry out, convincing Congress and the American public that the agency can get back on track and become a trusted government entity again.”

Mr. Obama acknowledged as much in a statement announcing Werfel's change of assignment. "As we work to get to the bottom of what happened and restore confidence in the IRS, Danny has the experience and management ability necessary to lead the agency at this important time," Thursday's statement said. It might help a little that Werfel, who has held a number of posts at OMB, also worked for the George W. Bush administration on the Federal Accounting and Standards Advisory Board.

Perhaps his only consolation is that there is already an end in sight: Werfel plans to serve as acting IRS commissioner through the end of the fiscal year – now 4-1/2 months away.